Free Employers’ 401(k) Withholding Calculator

  1. OnPay
  2. Payroll Calculators
  3. 401(k) Withholding Calculator
Updated January 5, 2023

As a small business owner, one of the best ways you can retain great employees, aside from paying them awesome salaries, is by offering a 401(k) retirement plan. Employees can participate by contributing either a flat dollar amount or a percentage of their gross salary from each paycheck. Many employers match this contribution up to a certain amount as a perk, but the IRS does not require matching.

There is some work involved in getting 401(k) deductions right, so we designed a calculator specifically to help you figure out your employees’ take-home pay quickly and accurately.

All you have to do is enter a few details about their plan participation information, and the calculator will do the rest of the work for you.

Calculate your employee’s 401(k) withholding:

Why offer a 401k plan for employees?

As tax-deferred retirement accounts, 401(k) plans are beneficial to your employees because contributions are exempt from being taxed this year. Let’s look at a quick example of how this works.

Sally makes $5,000 a month. If we keep things simple and assume she is in the 20% federal tax bracket and pays no other taxes, her tax obligation would be $1,000.

But let’s say she decides to contribute 10% (or $500) of her monthly salary to her 401(k) account. Her taxable income now shrinks to $4,500, so her tax obligation also decreases from $1,000 to $900. That $500 she contributes monthly into her 401(k) account remains tax-free until she is eligible to withdraw it from her plan at age 59.5. (And adds up to nice retirement fund!)

Note that the maximum amount your employees can contribute to their 401(k) plan does vary each year. For 2022, it is $20,500.

Top-rated payroll. Built for you, designed by experts.


Your first month’s on us

Try OnPay out yourself to see how easy payroll and HR can be. To get started, just share a few basic details about your business. Our team of pros will set everything up and import your employees’ information for you.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.